Social innovation in local development : Lessons from the Nordic countries and Scotland

NORDREGIO WORKING PAPER 2017:2

Social innovation in local

development: Lessons from the

Nordic countries and Scotland

Andrew Copus, Liisa Perjo, Anna Berlina, Leneisja Jungsberg,

Linda Randall & Hjördís Sigurjónsdóttir

Social innovation in local development:

Lessons from the Nordic countries and Scotland

Social innovation in local development:

Lessons from the Nordic countries

and Scotland

Andrew Copus, Liisa Perjo, Anna Berlina, Leneisja Jungsberg,

Linda Randall & Hjördís Sigurjónsdóttir

Social innovation in local development: Lessons from the Nordic countries and Scotland Nordregio Working Paper 2017:2

ISBN 978-91-87295-46-1 ISSN 1403-2511 © Nordregio 2017 Nordregio P.O. Box 1658

SE-111 86 Stockholm, Sweden nordregio@nordregio.se www.nordregio.se www.norden.org

Analyses and text: Andrew Copus, Liisa Perjo, Anna Berlina, Leneisja Jungsberg, Linda Randall & Hjördís Sigurjónsdóttir Cover photo: Pipsa Salolammi

Photos on page 9: Nordregio, Jim Manthorpe, Anne-Merte Lind, Reidun Aspmo and Mikhail Slavin.

Nordic co-operation

Nordic co-operation is one of the world’s most extensive forms

of regional collaboration, involving Denmark, Finland, Iceland, Norway, Sweden, and the Faroe Islands, Greenland, and Åland.

Nordic co-operation has firm traditions in politics, the economy,

and culture. It plays an important role in European and inter-national collaboration, and aims at creating a strong Nordic community in a strong Europe.

Nordic co-operation seeks to safeguard Nordic and regional

interests and principles in the global community. Common Nordic values help the region solidify its position as one of the world’s most innovative and competitive.

The Nordic Council

is a forum for co-operation between the Nordic parliaments and governments. The Council consists of 87 parliamentarians from the Nordic countries. The Nordic Council takes policy initiatives and monitors Nordic co-operation. Founded in 1952.

The Nordic Council of Ministers

is a forum of co-operation between the Nordic governments. The Nordic Council of Ministers implements Nordic co-operation. The prime ministers have the overall responsibility. Its activities are co-ordinated by the Nordic ministers for co-operation, the Nordic Committee for co-operation and portfolio ministers. Founded in 1971.

Nordregio – Nordic Centre for Spatial Development

conducts strategic research in the fields of planning and regional policy. Nordregio is active in research and dissemina-tion and provides policy relevant knowledge, particularly with a Nordic and European comparative perspective. Nordregio was established in 1997 by the Nordic Council of Ministers, and is built on over 40 years of collaboration.

Table of Contents

Foreword ...6

Acknowledgements ...7

Executive Summary...8

Introduction ...10

Part 1: Understanding Social Innovation in Local Development ... 11

Definitions of social innovation ... 11

Social innovation and local development ... 12

The role of the public sector ...14

Social innovation and social enterprise ... 14

Can the preconditions for social innovation in local development be nurtured by policy? ... 15

Part 2: Social Innovation in the Nordic Context and Scotland ... 17

Supporting social innovation in local development ... 17

Social innovation responding to demographic challenges ... 19

DENMARK ...20 FINLAND ...24 NORWAY ...27 SWEDEN ...30 ICELAND...32 SCOTLAND ...34

Part 3: Learning from Practice ... 38

Final remarks...42

Foreword

This publication reports on the outcomes of a project that explores the role of social innovation in local de­ velopment in the Nordic countries and Scotland. The project was commissioned by the Nordic Working Group on Demography and Welfare under the Nordic Council of Ministers’ Committee of Senior Officials for Regional Policy, and carried out by Nordregio. One aim of the project has been to develop a platform for investigating conceptual, empirical and policy devel­ opments in relation to social innovation with a focus on tackling societal problems in demographically vul­ nerable regions and municipalities across the Nordics. As part of the project, an online platform about Social Innovation in Local Development has been developed. This report brings together the three main components from the web platform. To provide an understanding of the concept, the first part presents a review analysing the abundant literature on social innovation that spe­

cifically relates to rural and remote areas that are facing demographic challenges. The second part is a review of the policy context of the Nordic countries and Scotland and describes how social innovation sits within, and is modified by, national and local governance arrange­ ments and policy. The third part provides a brief over­ view of the lessons learned from the 23 examples of social innovation in local development and the chan­ nels of financial and advisory support.

Seen from a political perspective, it has been valuable to understand the context of social innovation in the Nordic countries. Social innovation has been a buzz­ word in the European Union for some time; in the Nor­ dic context, policymakers are becoming aware of the relevance of supporting social innovation. It is also im­ portant to highlight the rural focus in this study and how small communities develop innovative solutions to some of their local challenges.

Sverker Lindblad Chair of the Nordic Working Group on Demography and Welfare

Kjell Nilsson

The authors of this report would like to thank the members of the Nordic Working Group on Demography and Welfare for their valuable contributions and com­ ments, especially on the country­specific chapters. The authors are grateful to the participants in interviews

Acknowledgements

conducted for this report concerning both the national contexts for social innovation and the local case studies. Finally, the authors acknowledge the efforts of Åsa Minoz who contributed to the country description on Sweden.

This report presents background research on the work carried out by Nordregio in the project “Social Innova­ tion in Local Development in the Nordic Countries and Scotland”, which was commissioned by the Nordic Council of Ministers’ Working Group on Demography and Welfare. The main objectives of the project were to investigate the concept of social innovation in relation to local and rural development, study the governance context in social innovation in rural areas in the Nor­ dics and Scotland, conduct case studies in rural areas in all the Nordic countries and Scotland, as well as study the existing support systems for social innova­ tion in particular in rural areas. The case studies are summarised in a separate document and on the pro­ ject’s website.

With its roots as far back as the 18th _{and 19}th

cen-turies, the phenomenon of social innovation is not entirely new. However, the term social innovation has been popularised by the “perfect storm” created by economic recession and austerity, combined with long-er-term demographic and social trends, which increas-ingly highlight the inadequacy of conventional service delivery models developed over the past 50 years.

There are a number of definitions of social innovation. The one favoured by the authors of this Working Paper was first set out in a report from the Young Founda-tion in 2010: “Social innovaFounda-tions are innovaFounda-tions that are social in both their ends and their means.” (Young Foundation 2010) Thus, social capital is both a pre-condition and an outcome of social innovation, which strengthens the community’s capacity to respond to future challenges. After establishing the concept, the

report provides a review of the governance and policy context for social innovation in the Nordic countries and Scotland, which is intended to inform and support those interested in promoting social innovation in a rural context in the Nordic countries.

Opinions are divided regarding the role of the public sector in social innovation. Some see it as an attractive policy tool, a hybrid phenomenon drawing different resources from the public, private and third sectors, while others view it as evidence of a failure of public policies. We argue that attitudes to public sector in-volvement are likely to be conditioned both by path dependence within different welfare regime contexts, and by different forms of local governance. Thus, the close relationship between municipalities and local communities in the Nordic countries provides a basis for active public sector involvement in social innovation.

This background report should be considered as an introduction and context for the 23 social innovation cases from across the five Nordic countries (including one from Åland and one from the Faroe Islands) and Scotland that are described in the accompanying docu-ment and on the project’s website. The cases are diverse – from a focus on solving single issues in a community to those that aim to regenerate a whole community for its sustainability now and in the future. They also vary according to the communities they originate in, with different policies and standpoints towards social inno-vation, underlining the importance of understanding these differences and how preconditions can affect the ability for social innovation to thrive.

1. Introduction

This Working Paper is part of a project commissioned by the Nordic Working Group on Demography and Welfare set up by the Nordic Council of Ministers’ Committee of Senior Officials for Regional Policy. The project investigates the role of social innovation in re­ sponding to the challenges facing rural and remote re­ gions in Nordic countries. These regions are heavily impacted by rural–urban migration, not only accentu­ ating sparsity but also distorting the age, gender and socio­economic balance by depleting the population of young, well­educated and economically active people. At the same time, there is a growing push towards in­ creased efficiency in the use of constantly shrinking public resources. Taken together, these trends consti­ tute something akin to a “perfect storm” in which de­ mographic shifts are increasing the need for services, while at the same time resources for services are de­ creasing. This makes it incredibly difficult to maintain acceptable levels of well­being and economic vitality in rural communities.

Social innovation has been suggested as a potential way to address these challenges and, as such, this pro­ ject sought to act as a Nordic platform for investigating conceptual, empirical and policy developments in the field with a focus on tackling societal problems in de­ mographically vulnerable localities across the Nordics. The inclusion of Scotland was largely due to its similari­

ties to the Nordic countries with respect to settlement patterns coupled with the highly developed nature of social innovation as a concept in the Scottish context.

Comprising three interconnected parts, this report is the final activity of the project and draws together the results of all the other project activities.

Part 1: Understanding Social Innovation in Local Devel-opment analyses the abundant literature on social inno­

vation that specifically relates to rural and remote areas that are facing demographic challenges. This analysis is intended to lay a firm conceptual foundation for the re­ maining parts of the project.

Part 2: Social Innovation in the Nordic Context and Scotland describes how social innovation sits within,

and is modified by, national and local governance ar­ rangements and policy. It also explores support mecha­ nisms for social innovation in the Nordic countries.

Part 3: Learning from Practice presents a concise over­

view of the lessons learned from the 23 cases studied for the project. A detailed account of each case can be accessed through the online resource www.nordregio. se/socialinnovation and in the accompanying document to this Working Paper.

Several writers argue that the concept of social innova­ tion has a long history, tracing its origins back to the work of Joseph Schumpeter in the 1930s (Mulgan and Pulford 2010; Neumeier 2012; Bosworth et al. 2015a). Others point out that the phenomenon existed long be­ fore the term was used to describe the concept (e.g., Mulgan and Pulford 2010, 20). References to social inno­ vation have been scarce in the years since Schumpeter’s work, and the concept did not crystallise into its cur­ rent form until well into the 2000s. Harris and Albury (2009, 17; see also Bock 2016, 8) note the association of this increased interest with the financial crisis, and suggest that social innovation gained popularity as the shortcomings of New Public Management, with its em­ phasis on market­oriented approaches to service provi­ sion, became increasingly evident. It also coincided with the increasing consensus about a number of serious social challenges (global warming, demographic ageing, etc.). At the same time, the broader concept of the “social economy” (Harris and Albury 2009, 18; BEPA 2011, 29) was gaining widespread acceptance. The social economy encompasses not only social innovation, but also many other phenomena which although associated with eco­ nomic activity are not solely motivate by profit, competi­ tion and market forces; such as social enterprise, the third sector, corporate responsibility and so on. In the process of being taken as a panacea for a range of prob­ lems during the dark days of the recession, it is easy to understand why social innovation became a rather flexible and ambi guous buzzword.

Definitions of social innovation

Social innovation is a “contested concept” (Bock 2016, 2). The literature offers many definitions, some rather vague and inclusive, others tighter and more specific. According to Bosworth et al. (2015b), the “burgeoning literature on social innovation is replete with referenc­ es to the need for a sound conceptual or methodologi­ cal framework, greater clarity and more theoretical and empirical work”. Bock (2012, 61) suggests that dif­ ferent meanings are often intentionally “jumbled” to­

Part 1: Understanding Social

Innovation in Local Development

gether because “fuzziness contributes to discursive power”. The purpose of Part 1 of this Working Paper is to clarify how we are using the term in our project, and to explore some of the theoretical implications, using the existing academic literature as the source.

Bock (2012) takes a broad perspective, suggesting that the term social innovation is used in the following three ways.

n

To highlight the fact that any kind of innovation (a

change in technology, product or administrative prac­ tice) takes place within a social context; in her words, they are “socially, culturally and territorially embed­ ded” (ibid., 58).

n

To draw attention to the fact that not all innovations are “socially responsible”.

n

To describe a change in “social relations, people’s

behaviour, and norms and values … social innovation needs innovative governance … . It should invest in civil society and community development and support collective action, self­governance and political empow­ erment” (ibid., 8).

In a review of the literature, Neumeier (2012, 49) ob­ serves that the term social innovation “can refer to the effort, method, result or change initiated by collabora­ tive actions” and distils the following common charac­ teristics of social innovation concepts (ibid., 54–55; for a similar list, see Bock 2016, 10–11).

n

They are generated by a social process, rather than

invention by an individual.

n

They are usually triggered by a societal need.

n

They respond to immediate needs rather than a dis­

tant goal (i.e., they are “non­teleological”).

n

The persons involved in the process perceive them

to be new (within their context).

n

They change attitudes, behaviours and perceptions.

n

Their practical implementation appears, to those in­ volved, to be superior to existing methods.

n

They are essentially about creating social assets,

Based on this, Neumeier (2012, 65) comes up with the following definition: “social innovations can be gener­ ally understood as a change in the attitudes, behaviour or perceptions of a group of people joined in a network of aligned interests that, in relation to the group’s hori­ zon of experiences, leads to new and improved ways of collaborative action in the group and beyond”.

This more focused definition equates to Bock’s third usage (see above). It has become the generally accepted meaning in the European policy discourse and it is at the heart of the definition that is most frequently quot­ ed. This definition is sometimes attributed to the Bu­ reau of European Policy Advisors (BEPA 2011, 33), or to Murray et al. (2010, 3), although both sources seem to have been quoting an earlier report by the Young Foundation (Mulgan and Pulford 2010, p. 17–18). The concise version is:

“Social innovations are innovations that are social in both their ends and their means.”

This is followed by a more explanatory version (ibid.): “…new ideas (products, services and models) that simultaneously meet social needs (more effectively than alternatives) and create new social relation­ ships or collaborations. In other words they are in­ novations that are not only good for society but also enhance society’s capacity to act.”

As Mulgan and Pulford (2010, p. 16) point out: “Social innovation describes the processes of invention, diffu­ sion and adoption of new services or organisational models … . It also describes the outcome – the service or model being developed.” Thus, social innovation has both a process dimension and an output dimension. With regard to the former, it is important that the so­ cial process is inclusive and collaborative rather than competitive (BEPA 2011, 35). Social innovations are of­ ten generated within distributed social networks, rath­ er than centralised structures (Murray et al. 2010, 5). With regard to the output dimension:

n

Outputs are not just measurable in quantitative

terms (costs saved, increased efficiency) but are also qualitative (well­being, solidarity, etc.) (ibid., 34);

n

Social innovations are often “innovations that respond to social demands that are traditionally not addressed by the market or existing institutions and are directed to­ wards vulnerable groups in society” (ibid., 37);

n

They tend to address “Societal challenges in which

the boundary between ‘social’ and ‘economic’ blurs,

and which are directed towards society as a whole and involve end users” (ibid., 42);

n

They can have a wider impact upon society, creating “a more participative arena where empowerment and learning are both sources and outcomes of well­being” (ibid., 40).

An ongoing EU Framework 7 project, SIMPACT1) _{, de­}

fines social innovation as “novel combinations of ideas and distinct forms of collaboration that transcend estab­ lished institutional contexts, with the effect of empow­ ering and (re)engaging vulnerable groups, either in the process of the innovation or as a result of it” (Terstriep et al. 2015, 10). This definition strongly underlines the non­materiality of the innovation, and therefore views the outcome in terms of the inclusion of vulnerable groups, rather than more tangible impacts, such as the reinvention of service delivery arrangements.

Moulaert (2009, 19–21) emphasises the fact that since their novelty is subjective and defined by contex­ tual norms, social innovations can only be identified and understood through an understanding of their ter­ ritorial and cultural environments, together with the role of path dependency.

In this project, we feel that the Mulgan and Pulford definition (quoted above) is the clearest and most useful as a basis for exploring the role of social innovation in generating new responses to the challenges presented by demographic change in rural and sparsely populated areas. This is because it highlights the role played by social capital and community cohesion, as both the sources and the beneficiaries of the social innovation process. This is the key aspect picked up by a number of writers who have made the link between social in­ novation and bottom­up rural development – or more precisely, “neo­endogenous” processes – thus relating social innovation to a substantial literature on practical policymaking.

Social innovation and local

development

In this section, we begin to shift our view from social innovation in general to focus on research that explicitly connects the nature of the process with its geographical environment, both locally and further afield. In other words, we begin our focus on social innovation in local development.

Although every social innovation operates within 1) SIMPACT: “Boosting the Impact of Social Innovation in Europe through Eco­ nomic Underpinnings”.

ethics and codes of practice that are constructed in the local community and territorial context (Mou­ laert 2009, 7), both local territorial embeddedness and wider networks are important success factors for social innovation: “social innovation can never be analysed as belonging only to ‘its’ place, the place where it was generated, but as occurring within a complex web of spatial interconnections”. Moulaert (ibid., 16–17) goes on to describe the role of social innovation in what he terms integrated area development, which is, in es­ sence, a bottom­up (endogenous) community develop­ ment process. Such processes are socially innovative because they depend upon the creation of new social relationships, institutions and forms of governance, and also because they address inequality and social ex­ clusion (ibid., 17–18). Moulaert explains (ibid., 16) that such phenomena are most often associated with urban areas in the developed world, due to the “high tangibil­ ity of decline and restructuring” in densely populated contexts, but also because “spatial density works as a catalyst for revealing alternatives … proximity to insti­ tutional and economic arenas underscores the ambigu­ ity of these neighbourhoods: they are both hearths of doom … and ambits of hope … and often become loci of new types of social relations and drivers of alternative agendas”. Not all local contexts are capable of nurtur­ ing social innovation. Moulaert describes those that are not as “disintegrating”.

Notwithstanding Moulaert’s arguments about social innovation being more likely in urban contexts, a num­ ber of writers have drawn attention to the role that social innovation seems to play in rural development processes, especially in what in recent years has become known as “neo­endogenous” growth. In very broad terms, this follows the rejection of top­down (exogenous) policies that were common at the end of the 20th century, and the purely locally based “endogenous” approaches that followed. Neo­endogenous development requires a fine balance between local initiative and resources on the one hand, and appropriate inputs of capital, expertise and sources of innovation, which may best be accessed by networks stretching out into the wider world (Ray 2006; Bosworth 2012; Bosworth et al. 2015a, 2015b; Bock 2016). Thus, according to Bosworth et al. (2015a, 3): “Neo­endogenous development is based on local re­ sources and local participation but is also characterised by dynamic interactions between local areas and their wider environments.”

One of the first to see this connection was Neumeier (2012), who affirmed that “social innovation seems to be one of the key requirements of successful rural de­ velopment, … the importance of social innovations for the success or failure of sustainable neo­endogenous

rural development should not be underestimated” (ibid., 65).

More recently, Bock (2016) has made the connection between social innovation, neo­endogenous approaches and the changing role of proximity in rural develop­ ment, and has coined the term “nexogenous growth” to describe the processes of change that she observes. Bock points out that social innovation encompasses key characteristics of a number of earlier approaches to rural development (exogenous, endogenous and neo­endogenous) and also has much in common with relational place­making approaches (ibid., 4). What is distinctive about social innovation is “the explicit im­ portance attached to social inclusion and the expected beneficial effect of social innovation for society as a whole … policy documents on social innovation under­ score the prominence of not only self­determination but also self­help and self­reliance as components of social innovation” (ibid., 4–5).

Bock argues that “collaboration across space is the sine qua non of development in the current context” (2016, 2), and this is the foundation of the style of de­ velopment that she describes as “nexogenous growth”. In this context, the role that social innovation plays “shifts our perspective from fixed actors in separate rural areas towards a more fluid image of shifting actors and relations and functional networks operating across places and beyond the local and rural. … Conceptually, social innovation transcends the boundaries of specific places and even the rural space. It is evident that rural social innovation requires networking and the building of relations across the borders of the place in question” (ibid., 18).

Just as Moulaert observed that not all urban locali­ ties/communities have the preconditions for social in­ novation, Bock argues that many marginal areas have reduced capacity due to sparsity, exacerbated by out­ migration that “results in the loss of the most entrepre­ neurial people” (ibid., 15), and by cost savings in the public sector that lead to centralisation of service provi­ sion. She concludes that a reliance on social innovation as a “self­help” strategy driven by local social capital is likely to result in increased spatial inequalities; areas that are able to respond will leave behind those that lack the preconditions. “The political­economic con­ text of rural development has changed, whether we like it or not. In some rural areas, the resulting prob­ lems mobilise engagement of citizens, NGOs, the third sector and business. In others, this does not happen – maybe because the local asset basis is (already) too weak” (ibid., 17). For Bock, the solution for such “dis­ integrating” areas is “reconnection” rather than “self­ help”. Regional and national institutions and agencies

have a responsibility to facilitate this: “social innovation still has potential if understood as a call for change at a higher level of development politics and not just as a matter for local communities” (ibid., 16). However, it is not entirely clear what a policy of “reconnection” looks like in practice, and what specific measures are likely to be most effective in supporting nexogenous growth processes.

The role of the public sector

In this section, we address an issue that is extremely important in the Nordic context, namely the role of the public sector in social innovation. As illustrated by the following quotations, the early literature generally took the view that social innovation did not privilege the third sector, and could just as easily involve public or private sector actors.

“…many innovations take shape within organisa­ tions – public agencies, social enterprises, mutuals, co­ops, charities, companies as well as loose associa­ tions” (Murray et al. 2010, 6).

“Social innovation can take place inside or outside public services. It can be developed by the public, private or third sectors, or users and communities — but equally, some innovation developed by these sectors does not qualify as social innovation because it does not directly address major social challenges” (BEPA 2011, 37).

“…social innovation does not have fixed bounda­ ries; it cuts across all sectors (the public sector, pri­ vate sector, third sector and household)” (Mulgan and Pulford 2010, p. 14).

“Social innovation can take place inside or outside of public services. It can be developed by the public, private or third sectors, or users and communities” (Harris and Albury 2009, 16).

This view was associated with the concept of the social economy. Murray et al. (2010) explained:

“This social economy is the source of social innova­ tion. However, while it already plays the key role in developing new models and services to meet social needs, it could play an even greater role. … The social economy is a hybrid. It cuts across the four sub­ economies: the market, the state, the grant economy, and the household. … If the social economy is a hybrid, so are the firms, states, charities and house­

holds that operate within it. They have a base in one of the four sub­economies, but also operate across its boundaries” (ibid., 143).

Other writers argue that the increasing popularity of social innovation is associated with a reduced role for the public sector. Harris and Albury (2009, 17) argue that the “long emergence of social innovation to its current prominence represents a growing recognition of the inherent limits of the state, the market and of voluntarism as they are traditionally conceived”. Bock (2016, 8) asks: “Is social innovation, then, nothing other than the withdrawal of the state and shifting of respon­ sibilities to the individual and the market?” For Bock, it appears that the answer is yes: “Social innovation may, hence, also be interpreted as a result of the dismantling of the welfare state, and return to traditional models of mutual help” (ibid., 10–11). “Many [social innovation initiatives] reflect the wish to regain power and a say over their community and to operate at a distance from the government” (ibid., 11).

Although we currently have no evidence to support this observation, it may be that such a view is not trans­ ferable between different local governance and welfare regime contexts. It is possible that such a disconnect between the (local­level) public sector and civil society is more likely where the structure of governance has become more centralised, and where the effects of aus­ terity have been strongly felt at the local level. It seems possible that where the relationship between the local community and the local administration continues to be characterised by high levels of trust, it is more likely that the public sector will be involved in, or indeed exercise leadership in, networks that carry out social innovation. Our review of national contexts for social innovation suggests that this may well be the case in the Nordic countries.

Social innovation and social

enterprise

Social innovation is often confused with social entre­ preneurship/enterprise (Mulgan and Pulford 2009, p. 15–16), which after all is not surprising since there is indeed some overlap between them. Perhaps the easiest way to distinguish them is to recognise that social en­ terprise is a business model, (associated with the activ­ ity of social entrepreneurship), while social innovation is a process that may (or may not) lead to the formation of a social enterprise.

Social enterprises are very much part of the social economy. They are run on commercial lines, but with goals that relate to the delivery of social value rather

than profit. As explained above, social innovations are distinguished by the fact that they are created by social interactions, and in turn, they create new social net­ works, stronger social capital and community capacity. This may or may not be manifest in the form of a new business, or social enterprise.

Social enterprises may well be part of the solution to the challenges associated with demographic change. They are also more tangible and therefore easier to study than social innovation. However, in this project, we are interested in social enterprises only if they are associated with social innovations.

Can the preconditions for social

innovation in local development

be nurtured by policy?

Finally, we consider the broad principles for policy that may be derived from the above clarification of the con­ cept. Here, it is important to keep in mind this project’s focus on social innovation, as the process through which new ways of responding to demographic chal­ lenges are generated (rather than on the requirements for successfully maintaining social enterprises, or oth­ er kinds of solutions.)

Most of the early reviews of social innovation (Mul­ gan and Pulford 2010; Harris and Albury 2009; Murray et al. 2010) devote substantial space to discussing ways in which national policy can create favourable condi­ tions for and support social innovation across the full range of policy areas. The Nordic Council of Ministers recently published an extensive report on “Social Entre­ preneurship and Social Innovation: Initiatives to Promote Social Entrepreneurship and Social Innovation in the Nordic Countries”. Many of their recommendations are also apposite to social innovation in local development.

It is worth reiterating that rural areas vary in their capacity for social innovation, and therefore the poli­ cy objective should be, at least in part, to understand better and nurture the preconditions for social inno­ vation in areas that seem less well adapted to it. The conceptual framework presented above suggests some broad guidelines as to how local policies adopted by municipalities and other local or regional actors might create conditions in which social innovation may be nurtured. Thus, “the state should promote capacity building among citizens and the local government to improve their capacity to mobilise the local commu­ nity” (Bock 2016, 16).

Three approaches are apparent in the literature. (1) The first approach involves facilitation of the pro­ cess through which local social networks develop via­

ble alternative solutions to the issues they face. The lit­ erature is replete with advice and examples on how to stimulate a local dialogue to generate the ideas and networks that may become the basis for social innova­ tion (see, e.g., Mulgan and Pulford 2010, Harris and Albury 2009, Murray et al. 2010). There is also some social innovation analysis relating specifically to the EU LEADER programme and the rural context (Bos­ worth 2015a). Various techniques including public consultations and workshops are commonly used. Strengthening local networks and “bonding capital” is extremely important, although, as we will see, this is not enough on its own.

(2) A second approach is the transfer of good practice between rural areas that face similar issues but that are geographically remote from each other. According to Bock (2016, 17): “social innovation does not need to be­ gin locally, and it may also include the uptake of novel solutions developed elsewhere”. In this approach, the focus is on making available information about suc­ cessful social innovation, developed in remote or sparsely populated areas, which has the potential to be adapted and implemented in other similar areas. Here again, the EU LEADER programme has a strong track record2)_{, along with other actors that create national}

and international forums for exchange of good prac­ tice, such as the rural parliament movement3)_{, or the}

PREPARE network4)_{. Of course, this project aims to}

contribute to the exchange of good practice, which dif­ fers from most of the examples already available by fo­ cusing particularly on understanding the process and characteristics of the social innovation involved. (3) Finally, there is a need for the “reconnection” of re­ mote rural communities with external sources of ideas, support and funding. Bock asks (2016, 16): “Can we re­ ally expect social innovation to step in where the re­ source base for regeneration is seriously under pressure? Based on experiences with LEADER, it may be expected that only the most resourceful rural areas are able to develop social innovations, as alternative models of service provision are grounded in collective action and co­operation. If this is true, social innovation will re­ confirm existing inequality and promote further spatial disparity.” Bock insists that social innovation should not be viewed simply as a call to local communities to take responsibility, and rely solely on their own re­ 2) http://ec.europa.eu/agriculture/rur/leaderplus/gpdb_en.htm

3) http://europeanruralparliament.com/ 4) http://www.preparenetwork.org/

sources. It is also essential that “a higher level of devel­ opment politics” is supportive. Global forces are ulti­ mately responsible for the social and demographic trends affecting marginal rural areas and “the prob­ lems they generate are too big to be locally solved” (ibid., 16). It is also necessary that policy should en­ hance “access to complementary external resources … embedding local development in wider collaborative relations” (ibid.). The provision of physical communi­ cations infrastructure (such as high­speed broadband) is necessary, but not sufficient. The exogenous support or “bridging capital” that local actors in rural social in­

novation require suggests a need for carefully designed support strategies from regional and national levels of governance.

Part 2 focuses on how the Nordic countries and Scot­ land support and promote social innovation in local development, as well as on the governance systems around social innovation and local development in each country. The next sections present a summary of the organisations and funding that support social in­ novation, followed by in­depth accounts on social in­ novation for each of the Nordic countries and Scotland.

Supporting social innovation in

local development in the Nordic

countries and Scotland

In many cases, social innovation in rural areas is reli­ ant on either the financial support or advisory support from outside actors. It is necessary to have sufficient support mechanisms available that also target rural ar­ eas and their specific challenges, not least because the challenges may differ from those in urban areas and because community actors may not have the required skill sets to develop their ideas or to complete complex funding applications.

To understand how social innovation can be sup­ ported, it is important to have a basic understanding of the different legal or organisational forms that social innovations can lead to. Indeed, social innovations can lead to the establishment of businesses or organisations that take a number of different legal forms (with varia­ tions between countries depending upon national law), such as limited liability companies, partnerships, com­ munity development trusts, non­profit associations or co­operatives. In all these cases, it will be necessary to specify in some way that profits will be reinvested for the development of the business, or for other social pur­ poses (CEC 2014). In the U.K., a dedicated legal form for social enterprises, the Community Interest Com­ pany (CIC), was introduced in 2004 in an attempt to simplify administrative and reporting requirements (CEC 2014).

The legal and tax framework for social enterprises varies considerably between countries. In recent years, each of the Nordic countries has adopted a number of approaches to try to make the legal and business envi­ ronment more friendly to social innovation and social entrepreneurship. In this respect, the U.K. has generally gone further and faster. In Finland, for example, the Social Enterprise Mark was introduced in 2011 to give social enterprises greater distinctiveness in the market­ place. In Denmark, a law was passed in 2014 (L 148 Forslag til lov om registrerede socialøkonomiske virk­ somheder) to set up a national register of social enter­

prises. In Sweden, there is a similar register, but only of social enterprises relating to integration in a labour market context (CEC 2014). To our knowledge, none of the Nordic countries gives tax incentives to social enterprises, as is the case in the U.K..

We now present Nordic and Scottish organisations and support systems for promoting social innovations in different forms, as well as funding forms currently in use to support social innovation particularly in rural contexts.

Organisations promoting social innovation A variety of organisations of different forms (e.g., as­ sociations, non­profit organisations, business incuba­ tors, employers’ organisations) work to promote and support social innovations and entrepreneurship in the Nordic countries and Scotland with varied levels of fo­ cus on rural social innovation. Organisations that pro­ mote networking between social enterprises and provide incubator services have also appeared, but rarely with a specific sensitivity to rural challenges. This section pre­ sents some of the main organisations that promote both social innovation and social enterprise.

In the U.K., social innovation and social entrepre­ neurship have been prioritised at government level since the early 2000s. A unit responsible for promoting and facilitating social innovation and social enterprise has existed within the U.K. government department responsible for industry since 2002. The Scottish govern­ ment has also shown itself to be strongly in favour of fostering the social economy, and recently published a 10­year strategy for social enterprise (Scottish Govern­ ment 2016). The three key priorities of this strategy are to stimulate social enterprise, develop stronger organi­ sations and realise market opportunities.

In Denmark, Finland, Norway and Sweden, nation­ wide associations for municipalities and regional au­ thorities work with social innovation and, among other tasks, support public sector innovation in their member organisations. For example, the Norwegian Association of Local and Regional Authorities has studied the chal­ lenges and potential for innovative public procure­

Part 2: Social Innovation in the

Nordic Context and Scotland

ment; the Finnish Association of Local and Regional Authorities promotes social innovation in the public sector by, for example, co­ordinating projects and pro­ viding knowledge on issues such as user­based service design in the public sector. In addition, the Association has worked to find new methods for service provision in rural municipalities. In Denmark, municipalities co­operate through the Danish Municipality Network on Social Innovation, which promotes knowledge ex­ change. In Sweden, the Swedish Village Action Move­ ment has started to work with social innovation from a rural development perspective.

In the Nordic countries and Scotland, social en­ terprises are supported by organisations that provide knowledge, advice and networking opportunities. In particular, Norway and Sweden have business incuba­ tors for social enterprises, such as the SoCentral in­ cubator in Norway, which also facilitates co­operation between the public and private sectors, voluntary organisations and social entrepreneurs. In Sweden, Coompanion provides support to co­operative compa­ nies and social enterprises that focus on employment creation, with 25 regional offices across the country, making it an important actor also in more rural areas.

Sweden also has the Centre for Social Entrepre­ neurship in Sweden (CSES), which is managed by a non­profit association and has free incubator services for social enterprises. CSES provides business coach­ ing and a free workplace for social entrepreneurs for 4–6 months (Nordic Council of Ministers 2015). In Finland, the Finnish Association of Social Enterprises (ARVO) supports social entrepreneurs (Nordic Coun­ cil of Ministers 2015). In many cases, social enterprises also use general business support services that are used by other types of enterprises, especially in Finland, where there is less targeted support available for social enterprises (Nordic Council of Ministers 2015).

In the U.K., public sector support is paralleled by private sector initiatives such as the Young Founda­ tion, the National Endowment for Science, Technology and the Arts (NESTA) and organisations such as The Melting Pot in Scotland. In a rural context, social inno­ vation in Scotland has been supported by a number of organisations, notably the Development Trust Associa­ tion Scotland and the Scottish Council for Voluntary Organisations.

Various network organisations also provide support to social enterprises. Denmark has a nationwide forum for social entrepreneurs and many members of the net­ work are based in semi­rural areas. There is also a plat­ form for knowledge exchange on social innovation and social enterprise called the Danish Social Innovation Club (DANSIC), where some rural social innovations

and social enterprises are also involved. There are also region­specific examples of networking organisations such as the Social Economy North Jutland networking association, which primarily brings actors together for knowledge exchange, but also provides free assistance to entrepreneurs in the region, including both urban and rural areas (Nordic Council of Ministers 2015). In Sweden, the SKOOPI association is a separate network­ ing organisation for work­integration social enterprises, which are quite common in the Swedish context. It also provides networking opportunities and training (Nordic Council of Ministers 2015).

In addition to the organisations that work to sup­ port social entrepreneurs and social innovations, there are also organisations that focus on lobbying and chang­ ing the preconditions for mainly social entrepreneurs. In Sweden, the SKOOPI association aims to influence policies to improve the preconditions for running work­integration social enterprises (Nordic Council of Minister 2015). In Finland, ARVO works as an employ­ ers’ association with social enterprises as its members; the association also works to increase knowledge about social entrepreneurship and lobbies for changes in the policy framework and legislation related to social enter­ prises (Nordic Council of Ministers 2015). The Associa­ tion for Finnish Work promotes social entrepreneurship by managing a certificate called the Social Enterprise Mark (Association for Finnish Work 2016).

Funding for social innovation

Social innovation in rural areas takes place both within the public sector and in the private and third sectors, and in co­operation between them; funding sources therefore vary. A study by the Nordic Council of Min­ isters (2015) on social innovation and social entrepre­ neurship in the Nordic region looks at how different initiatives have been funded, and notes that Nordic social innovation and social enterprise initiatives rely largely on public funding, while it is also clear that many ini­ tiatives receive funding from multiple sources. This partly mirrors the situation where many initiatives in the Nordic context stem from the public sector, and in many cases, the respondents in the study also report combining funding from public and other funds (Nordic Council of Ministers 2015). For many social enterprises, funding comes from the public sector for the simple reason that they produce services for public authorities who pay for those services, while social enterprises may also create funding through their own activities, for example, by selling products.

Regarding public funding for rural social innova­ tion, the role of different EU funds is central in the Nordic EU member states and Scotland, with EU Rural

Development Funds, EU Regional Development Funds and EU Social Funds being emphasised; EU Social Funds, for example, explicitly mention supporting so­ cial innovation in many countries during the ongoing funding period. The importance of the LEADER pro­ gramme is also central in developing rural services in many Nordic remote and sparsely populated regions.

Many of the Nordic countries also have national public funding sources to support social innovation and social enterprises. For example in Norway, the Norwegian Labour and Welfare Organisation (NAV) provides funding for social enterprises in the field of poverty and social exclusion (Hauge & Wasvik 2016). In Sweden, the Swedish Agency for Economic and Re­ gional Growth runs a programme on social innovation and social entrepreneurship where rural social inno­ vation initiatives have also been funded. In 2015, the Swedish Innovation Agency VINNOVA launched a call for proposals for social innovation. In Denmark, the national public innovation fund supports social in­ novation; in Finland, the Innovation Fund Sitra some­ times funds initiatives that can be viewed as social in­ novation.

In the U.K., in 2010, former Prime Minister David Cameron attempted to popularise the concept of “Big Society”, which was associated with various schemes to promote social innovation, including a “Big Society Bank” to make access to capital easier for social enterprises.

Some regions and municipalities have also included social innovation and social enterprise in their regional strategies and provide some funding for the realisation of projects. For instance, the Growth and Develop­ ment Strategy 2020 for the Västra Götaland region in Sweden prioritises social entrepreneurship and pro­ vides support to projects in the field of social economy. The municipality of Trondheim has been strategically working with social entrepreneurship since 2014 by en­ couraging the use of the innovative services provided by social entrepreneurs to supplement the municipal public services. Trondheim municipality provides sup­ port to social entrepreneurs in the form of loans and grants to create more favourable conditions for social entrepreneurs.

Based on survey responses, the Nordic Council of Ministers report notes that the role of private inves­ tors and funds investing in social innovation and so­ cial enterprise is not yet large in the Nordic countries, which is in line with what our research indicates. The Research Institute of the Finnish Economy states that societal enterprises in Finland have difficulty in attract­ ing private funding; their unclear position in­between private companies and charities is one reason for this. Improved impact measurement would also be needed

to attract private funding as impact investments (Koti­ ranta & Widgrén 2015).

However, there are also private funding sources for social innovation and social enterprise available in the Nordics. In Norway, the investment company Ferd is among the forerunners in the field of social entrepreneurship and has provided funding to social enterprises since 2009. Ferd provides seed funding to social enterprises, as well as offers business develop­ ment support, advice and competence development, network building and incubation of social enterprises. The Danish private fond Realdania supports philan­ thropic initiatives and social innovations, as does the Social Capital Fund that was established by the insur­ ance company Tryg. In Sweden, there are, for exam­ ple, private regional microfunds (such as Mikrofonden Väst) that fund social enterprises, associations, local development groups and co­operatives. In many cases, social enterprises in the Nordic region can also receive funding from the same private funding sources as reg­ ular enterprises.

SoCentral in Norway is a membership­based organi­ sation that acts as a social innovation incubator, facilitat­ ing cross­sectoral co­operation between the private and public sectors, the voluntary sector and social entrepre­ neurs. The ideas are mainly financed through national funding and foundations.

Social innovation responding to

demographic challenges in the

Nordic countries and Scotland

All the Nordic countries and Scotland are facing demo­ graphic challenges that are particularly severe in the remote and sparsely populated areas. However, the approaches to meeting these challenges vary between the countries. In the following sections, the framework for social innovation in local development in each of the Nordic countries and Scotland is presented. Al­ though the structures of the descriptions vary, each au­ thor has aimed to cover two broad themes. The nature of social innovation in local development is inevitably a response to the space afforded to it by local governance structures and service provision arrangements; the first area of interest is therefore the broad policy and administrative context within which responses to de­ mographic challenges are made in the rural, remote and sparsely populated areas of each of the countries, and how these are changing. The second theme of these national accounts focuses on a description of the recent development of social innovation in local development, how it is used and the public sector efforts to support and nurture it.

The descriptions suggest that all the Nordic coun­ tries are responding to demographic challenges and the impacts on welfare and service delivery in broadly two ways. The first is to try to find cost savings and ef­ ficiencies in service delivery through the restructuring of governance and administration, that is, municipal reforms and the insertion of a regional tier of govern­ ance and administration. Each of the countries is at a different stage. At one extreme, Scotland restructured its local government in 1996 and now has the largest local government areas in Europe (in terms of popula­ tion). Unease at the degree of centralisation of power has resulted in a campaign by the representative body of local government to restore local democracy. In con­ trast, Finland is described as the most decentralised country in Europe. Even here, however, the govern­ ment is seeking to establish a regional tier of adminis­ tration and service delivery to benefit from economies of scale.

Each of the countries has their own story to tell about their efforts to respond to demographic challenges by local government and administrative restructuring. The significance of this for the current study lies in the fact that it seems to affect the role of the public sector and the third sector in developing innovative responses to the service and welfare challenges associated with demographic change. Thus, in Scotland, where the “Councils” have lost much of their freedom to act except as local delivery agencies for Scottish or U.K. policy, a burgeoning third sector plays a very important role in supporting local bottom­up initiatives that are often easily identified as social innovations in local develop­ ment. It is not unusual for such social innovations to turn into social enterprises, which are subsequently funded by the Councils. These social enterprises act as “subcontractors” to deliver services, which are either new, or have become the victims of austerity.

In the Nordic countries, it seems that rural com­ munities and their municipalities have a stronger re­ lationship, and higher levels of trust. Combined with a greater independence and freedom to act, this may account for the greater role of municipalities in devel­ oping responses to demographic challenges. Indeed, it is conceivable that where the relationship between mu­ nicipality staff and the community they serve is strong, the municipality itself may be viewed as an endogenous actor in a social process that leads to a social innova­ tion. In this sense, a public sector actor becomes part of the social innovation process, rather than a supporting agency, providing advice or financial support.

Thus, arguably, the outcome of the process of ad­ aptation to demographic challenges is broadly similar across the Nordic countries and even in Scotland; that

is, involving an increasing delivery role for the third sector, social enterprise and the private sector, with local/regional governance and public sector agencies acting as commissioning bodies and funders. How­ ever, these commonalities mask significant differences in the process through which locally adapted solutions evolve.

Subtle differences in the role of local public sector bodies in service innovation processes, both between the Nordic countries and Scotland, and perhaps also to some extent within the Nordic countries, underline the need to avoid superficial comparisons across these different contexts, and for careful consideration before assuming that good practice can be transferred without adaptation.

DENMARK

By Leneisja Jungsberg

The character of Danish social innovation in rural areas

In Denmark, the concepts of territorial and rural are different in scope than for the other Nordic countries as it is the country with the overall highest accessibility. Nevertheless, challenges such as an ageing population, outmigration of young people and families, few busi­ nesses and lower educational attainment among the inhabitants exist in many small communities on the outskirts of Danish municipalities.

Alongside the development of the welfare state, many social initiatives have been established by civil society. In the context of social innovation as a re­ sponse to a local challenge, it is common to establish projects based on co­operation between the third sec­ tor and the public sector; this is also evident among the examples from Denmark that have all received some type of public financing during implementation or as ongoing support.

In Denmark, there is a long tradition of people organ­ ising themselves to address societal challenges. In the early 19th _{century, collective action formed the basis for}

a number of co­operatives in rural areas, which today are referred to as “andelsbevægelsen” and constitute a co­operative business model formed by farmers to manage the transformation of agricultural business by the collective effort of investments.

Around 38% of the population are engaged as volun­ teers and many social innovation initiatives arise from activities in local associations and organisations (Frid­ berg and Henriksen Skov 2014, 10; Rene and Lauritzen 2012, 5). Small associations are central in rural com­ munities and they are a platform for social networking

that can lead to informal exchanges between people in the communities. In some cases, these informal ex­ changes can be characterised as a type of rural social innovation (Lohmann, interview 2016).

Demographic challenges in the rural areas Many peripheral municipalities in Denmark have a higher proportion of older people than the rest of the country. One challenge for rural municipalities is to at­ tract resources to ensure the continuation of businesses in the area as well as to mitigate demographic imbal­ ance. The island of Bornholm is a typical example of rural Denmark. According to population projections, by 2024, one in 10 citizens will have moved from Born­ holm and one in six of those remaining will be over 75 years old (Houlberg and Hjelmar 2014). Given this sta­ tistical forecast, many bottom­up initiatives are cur­ rently taking place on Bornholm to halt this trend. One campaign that has received considerable attention is “Bright Green Island” as launched by Business Centre Bornholm (2016).

The movement structures from 2003 to 2010 illustrate a clear trend of the well­educated moving to urban areas; in contrast, a larger percentage of socially marginalised people outside the labour market tend to stay in rural areas. To some degree, this is related to the lack of job opportunities that match levels of higher education, while the motivation for socially vulnerable groups re­ lates to the opportunity of getting a house with space for animals (Aner and Hansen 2014).

Because of the lower income from labour taxes, the economy in rural municipalities is under pressure, and the citizens in these municipalities are some of the first to experience the economic consequences (Kom­ munernes Landsforening 2016). In many places, this has led to comprehensive financial savings in rural areas resulting in the reduction of public workplaces, the closure of schools, kindergartens and other public institutions.

In a number of rural areas, such savings have prompt­ ed active citizens to establish their own initiatives, for ex­ ample, by opening a private school in co­operation with Organisation of Independent Schools, Dansk Friskole­ forening (Wittorff Tanvig, interview 2016). Through blog posts, Facebook and other social media, citizens in these areas have rebelled against the development of regional and municipal inequality that undermines the principle of universalism in the Danish welfare state (see, e.g., http://www.oprørfra­udkanten.dk).

Division of responsibilities in service and welfare provision

The national government provides a political frame­ work for municipalities to deliver welfare and service provisions. To make the municipalities more cost­ effective in delivering welfare services, a structural reform took place in 2007, which merged 14 counties into five regions and 271 municipalities into 98 municipalities.

The five regions have responsibility for areas such as the organisation of transport services, hospital ser­ vices, health insurance and private health care insti­ tutions, and institutions for groups with certain social needs, for example, relating to psychiatric treatment.

The municipalities are responsible for detecting ex­ isting social needs, formulating appropriate solutions and implementing them effectively. Thereby, they be­ come central actors in a comprehensive welfare sys­ tem of social security benefits and services. Areas of responsibilities for the municipalities include health, day care, public schools, social support, elderly care, the labour market and integration efforts (Sloth 2016).

With shrinking budgets due to public savings ini­ tiated by the government and with an expected 60% growth in the 65+ age group over the next 30 years, many municipalities are looking for new ways to ad­ dress social challenges. The Danish Technological In­ stitute has initiated The Danish Municipality Network

on Social Innovation, which provides a platform for lo­

cal government representatives to receive and exchange knowledge and inspiration related to social innovation. The network is formed by around 30 municipalities and represents roughly half of the Danish population (Hougaard 2016).

Municipalities as a platform for social innovation

Responses to a 2012 survey illustrate the broad inter­ face that Danish municipalities have with projects that they perceive as social innovation (Damvad Danmark A/S 2012):

n

67% of municipalities indicate that they work with

social innovation, including participation in projects with other actors such as knowledge institutions, com­ panies or local associations;

n

56% of municipalities have initiated their own de­

velopment projects about social innovation;

n

33% of municipalities have participated in collabo­

rative projects with other municipalities about social innovation;

n

17% of municipalities have a strategy for their work with social innovation.

One area where there is a particularly increasing focus on new solutions and co­operation with civil society is housing and the integration of immigrants. One in four Danish municipalities makes use of private ac­ commodation for refugees. However, in some cases, the short­term commitment of volunteers can become a barrier to co­operation between the public authori­ ties and civil society about welfare services (Wittorff Tanvig, interview 2016).

Two tendencies characterise the field of social in­ novation in rural districts with respect to projects that receive public financial support (Lohmann, interview 2016). The first relates to scientific evidence and the ef­ fort to prove the effect of a planned project. The second relates to validating new experiments, such as a current project that aims to make public libraries a platform to support vulnerable families in rural areas (Espersen 2015).

National policies affecting the field of social innovation

In 2012–2015, funds were allocated for social enterprises in a number of areas, for example, to work with dis­ advantaged people in the labour market. To be able to recognise social enterprises, a Social Enterprise Act was introduced. A social enterprise has to 1) have a so­ cial purpose, 2) be a private business, 3) be independent from the public sector, 4) be inclusive and responsible, and 5) make social use of any surplus generated (Rets­ information 2016). This is the first legislation in Europe that provides social enterprises with a specific kind of “company” registration that makes it easier to identify social enterprises for relevant co­operation partners from the public and private sectors.

In 2013, a committee was appointed to identify bar­ riers and opportunities as well as to make recommen­ dations to strengthen the national commitment in the public, private and third sectors. Following up on the committee’s recommendations, a National Centre for Social Enterprises (www.socialvirksomhed.dk) and a Council for Social Enterprises were established in 2014 (Nordic Council of Ministers 2015, 109–118). Due to a change in government with new political priorities, the financial support for these two organisations ended in 2015.

A general constraint for the development of more social innovation in Denmark is that certain kinds of initiatives that function well in other countries could risk being defined as illegal “black labour” in Denmark; for example, the concepts of Timebanking and Local Exchange Trading Systems, which are features of some successful innovations such as Social Innovator, a plat­ form supporting practitioners and other people who

can contribute to the creation of philanthropic pro­ jects; Zumbara in Turkey, a system where groups and individuals can pool and trade experiences and skills, using time instead of money as the unit of currency; and the Independent Transportation Network in the U.S.A., which provides non­profit transport services for the elderly. None of these initiatives would be legal in Denmark (Rene and Lauritzen 2012, 12). In some respects then, current Danish tax, employment, tender and procurement legislation constitute constraints to unconventional approaches in developing social inno­ vation solutions.

Community-based responses

However, economies of scale and decentralisation are not sufficient as a solution; endogenous responses must also play a role, and local communities and municipal­ ities have indeed shown a capacity to respond, for ex­ ample, where a community has continued the local grocery shop as a co­operative after the private mer­ chant decided to close down due to lack of profit. Many projects initiated by citizens are initiatives that fill out a lack of services, for example, a school, kindergarten or a local grocery store (Wittorff Tanvig, interview 2016). However, there are also examples of initiatives that in­ troduce new processes or products in the local area.

n

Transformation of an unused harbour area into a

restoration centre for ships for educational training for young people with special needs.

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Creation of a system of pathways in a recreational

area to allow, for example, handicapped people to visit the area.

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Renovation and transformation of industrial pro­

duction halls to office spaces for entrepreneurs, which cooperate with the nearby innovation school in Ryslinge in Fuen.

Forms of support

The majority of initiatives in the field of social innova­ tion in Denmark are funded from several different sources of funding (crowdfunding, public and private funds, private entrepreneurs) or from grants provided by public institutions (Nordic Council of Ministers 2015, 112–113). The European Regional Development Fund (ERDF) and the European Social Fund (ESF) are important sources of financing for rural development in Denmark (Hörnström et al. 2015, 16). In 2015 the government initiated 10 projects in the coastal areas to promote growth and development in rural parts of Denmark. These are all pilot projects that aim to ex­ pand, for example, housing and hotel facilities in some coastal areas. However, environmental organisations

have criticised the initiatives due to the risk of damag­ ing the natural environment in these areas (Adrian 2015).

Relevant actors in the field of rural social innovation

To support rural social innovation, the Ministry for In­ tegration and City Planning produced a new handbook to provide tools to stimulate development through the effort of mobilising local/internal resources to cooperate with national/external and international resources. The handbook stresses that bottom­up initiatives are more sustainable when there is a foundation for secur­ ing resources to organise the activities. This may in­ volve different types of financing, social capital, a busi­ ness network or initiatives carried out by the third sector (Wittorff Tanvig 2015).

Bottom­up initiatives of social innovation in rural areas in Denmark are often supported through public or private funds.

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Realdania (private fund with a philanthropic pur­

pose).

n

Social Capital Fund (private fund based on co­op­

eration with insurance company Tryg).

n

Innovationsfonden (public fund).

n

Danish Social Innovation Club (DANSIC), a volun­

teer non­profit organisation/platform for social inno­ vation.

n

A forum for social entrepreneurs; an association for everyone interested in social enterprise and social in­ novation.

Denmark has a long history of a strong third sector with a large number of associations engaging in a broad range of activities including sports and leisure activities such as painting, hunting, knitting, etc. These associa­ tions have historically contributed to the coherence and participatory inclusion of people living together in communities. Today, there is an increase in the num­ ber of volunteers who are not specifically part of an as­ sociation but who are more engaged in different types of social project work (Boje 2016). One example is the social network connected via the internet portal, www. eazyintegration.dk, which looks after immigrants and refugees in their local area. From the perspective of the rural association, the most important factor for rural development leading to social innovation is the citizens and their idea making. However, opportunities for public support such as Local Action Group (LAG) funds and local development funds from the ministries are es­ sential for realising projects (Andersen, interview 2016). The term “social innovation” is rarely used in the

rural context of local development; however, it is com­ monly used in connection with some of the platforms, forums and associations that work with the topic of social innovation. Occasionally these or other citizen initiatives are mentioned in the media and one theme that is often emphasised is the collective effort, as was the case in the online article “A New Participatory Approach Will Transform Denmark” (Beck­Nilsson 2016). In the article, the participatory approach is seen as a solution to demographic challenges, economic de­ velopment, social care and stronger, more resilient so­ cieties. A number of socio­economic consultancy firms have been established to work on finding synergies be­ tween a diversity of actors to create solutions and reach a “collective impact” to address societal challenges. Key characteristics

In the past century, collective social initiatives have played a central role in the development of the Danish economy and welfare society. Today, many rural mu­ nicipalities experience challenges relating to demo­ graphic changes and social innovation is seen as one approach to create bottom­up development. Many community­based responses, such as those noted above, receive some type of public financial support.

The municipal network for social innovation func­ tions as a platform for knowledge exchange and to gain inspiration about social innovation initiatives in different parts of Denmark. In a survey, 67% of mu­ nicipalities replied that they had worked with social innovation within the last year. One characteristic of many social innovation initiatives is the co­operation between the third sector, the public sector and in some cases the private sector.

A priority of the national government is to support the development of social enterprises and a national act was introduced to be able to identify them. This en­ sures that social enterprises fulfil a number of require­ ments and it creates a basis for public and private actors to recognise and co­operate with social enterprises.

FINLAND

By Liisa Perjo

What are the challenges in remote and sparsely populated areas?

Nordregio’s map of demographic vulnerabilities shows that many Finnish regions are facing a variety of demo­ graphic challenges. It also illustrates how the situation is most pressing in remote and sparsely populated areas in eastern and northern Finland. Many remote and sparsely populated municipalities experience the out­